Quiet-Quitting of U.S. assets drives bets into emerging markets and gold

Flows away from U.S. Treasuries have coincided with rallies led by Asian technology shares and with rising benchmarks for Emerging Europe, the Middle East and Africa and for Latin America.

Fund flows away from U.S. Treasuries have coincided with gains in other asset classes and regions. Asian technology shares are leading much of the rally and supporting broader emerging-market strength. The benchmark for Emerging Europe, the Middle East and Africa rose on all five trading days this week and is on course for its best month since 2020. The MSCI Emerging Markets Latin America index closed at its highest level since April 2018. Key facts: - Asian technology shares are driving a large portion of the recent market rally. - The Emerging Europe, Middle East and Africa benchmark rose on all five days of the week and is on course for its best month since 2020. - The MSCI Emerging Markets Latin America index closed at its highest level since April 2018. - A diplomatic dispute related to Greenland has revived questions about U.S. exceptionalism and the role of the dollar, and has been reported as prompting some funds from Europe to India to diversify away from Treasuries. - These flows have added momentum to emerging-market gains alongside reported factors such as robust global growth, an AI spending boom, political shifts in parts of Latin America, and fiscal and monetary policy orthodoxy in parts of the developing world. Summary: These shifts in portfolio flows have supported gains in emerging-market equities and other assets. The immediate market reaction reflects reallocations away from U.S. government debt and stronger demand for Asian technology and other emerging-market exposures. Undetermined at this time.